ROME — Silvio Berlusconi’s centre-right party has withdrawn its support for Italian Prime Minister Mario Monti’s ruling technocrats in a Senate vote on a key economic reform bill, taking the first step that could lead to the fall of the government and snap elections.
The vote on measures to promote growth in the economy was passed on Thursday with the support of the centre-left Democratic party, despite centre-right senators loyal to the former premier not participating.
The nonparticipation of Mr Berlusconi’s disintegrating People of Liberty party demonstrated that the government could not necessarily rely on a majority in the Senate, which has 315 seats plus several life senators, including Mr Monti.
Italian parliamentarians said on Thursday that Mr Monti should consult with President Giorgio Napolitano to determine his next steps. Mr Napolitano, who has the constitutional power to dissolve parliament, could ask Mr Monti to call votes of confidence in both chambers to see whether the government has the numbers to continue in office until the end of its mandate next April.
The crisis was precipitated by a power struggle within Mr Berlusconi’s party, which is divided over who should lead it into elections in spring and on what platform.
Markets reacted nervously to the outbreak of political uncertainty. Yields on Italian bonds, which had been falling, rose sharply, with the yield on 10-year bonds increasing by 13 basis points to 4.56%, while two-year yields jumped 17 basis points to 3.47%. Shares on the Milan stock exchange were down more than 1% after the vote.
Parliamentarians saw Mr Berlusconi’s decision to exclude his supporters from the morning vote as a demonstration of his continuing command over his disintegrating party.
But it remains to be seen whether he has the determination or enough backing in his party to bring down the government if Mr Monti calls for a vote of confidence. A date has not been set for elections, but March 10 is widely seen as likely.
Should the government fall, elections could be held next month or in early February.
On Wednesday night, Mr Berlusconi issued a terse statement in which he attacked Mr Monti’s handling of the economy.
Mr Berlusconi said Italy was "on the brink of the abyss" with increased unemployment, rising debts, a collapse in Italians’ spending power, unsustainably high taxes, companies closing, a crumbling construction sector and plunging car sales. After resigning a year ago under market and party pressures to make way for the unelected Mr Monti, Mr Berlusconi said on several occasions he would not run for a fifth term as prime minister. On Wednesday, he left that option open, saying many want him to be a candidate.
In a television interview on Thursday, Industry Minister Corrado Passera expressed strong reservations about a return by the 76-year-old billionaire, who left office in a cloud of scandal at the height of the eurozone financial crisis last year.
"Anything which can make the rest of the world or our partners imagine that we are turning back is not a good thing for Italy," he told state broadcaster RAI.
There are deep divisions within Mr Berlusconi’s party, which is split between loyalists opposed to Mr Monti and other factions.
Financial Times, with Reuters